Blog

You Can't Steer a Parked Car

As I reached for the gasoline nozzle, I realized at the very last minute that what I thought was regular gasoline was actually ‘plus,’ a grade that I did not want and that I would have paid a premium for. The reason for my near mistake? The way my options were ordered. I expected the grades to be ordered by octane as they almost always are. But in this case, regular 87 was sandwiched between two more premium grades.

The strategy that was employed at the pump at this Shell station in Virginia is an example of ‘nudging.’ It is an example of leveraging preexisting expectations and habits to increase the chances of a particular behavior. There is nothing dishonest about the practice. Information is complete and transparent, and personal freedom to choose is not affected. It is simply that the environment is structured in such a way as to promote one decision instead of others.

Ethically, I like the position of Thaler and Sunstein when they talk about ‘libertarian paternalism.’ In their view, nudging can be a way to reconcile a strong belief in personal freedom with an equally strong belief that certain decisions are better than others. But not all nudges are created equal. Just as it is possible to promote decisions that are better for individuals, so too is it possible to increase the likelihood of choices that serve other interests, and that even serve to subvert the fullest expression of personal liberty, as in the gasoline example above.

One way to think of marketing is as the use of the principles of behavioral economics to change consumer behavior. Marketers are in the business of nudging. Because nudging has a direct impact in human behavior, it is also a fundamentally ethical enterprise. Marketing carries with it a huge burden of responsibility.

What ethical positions do you take in your marketing efforts? What would marketing look like if we were all libertarian paternalists?